Chrysler LLC's plan to sell its best assets to a group led by Fiat SpA tomorrow was put on hold by a federal appeals court that will hear arguments by creditors challenging terms of the deal.
U.S. Bankruptcy Judge Arthur Gonzalez in New York had said the planned sale could be completed at noon tomorrow. He moved the date up from June 15, noting in an order that Chrysler is losing $100 million a day as it awaits a sale designed to make it a viable company in world markets.
The Manhattan-based appeals court said written arguments are due by noon today and that it will hear the challenge to terms of the sale by a group of Indiana pension funds tomorrow at 2 p.m.
"I expect they'll lift the stay and let the sale close," said Stephen Lubben, a bankruptcy-law professor at Seton Hall University in Newark, New Jersey. "I think the courts all understand that the consequences for Chrysler are dire if the deal with Fiat falls through."
Indiana Treasurer Richard Mourdock said he was pleased the Court of Appeals agreed to hear the state funds' arguments that they and other secured creditors have been made secondary to government-preferred unsecured creditors "in contravention of longstanding bankruptcy law."
"Indiana retirees and Indiana taxpayers have suffered losses because of unprecedented and illegal acts of the federal government," Mourdock said yesterday in a statement.
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